The Torts BusinessProfessor Edward P Richards

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Jurisprudential Purposes of Tort Law

Compensation for accidents and intentional wrongdoing Making the victim "whole"

Deterrence for future acts Punishment for past acts

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What Can You Get in a Tort Lawsuit?

Money

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What Can You Not Get in a Tort Lawsuit?

Life Limb Health Love Time Specific performance Attorney's fees

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What is Involved in Bringing a Tort Claim?

Attorney time Management of discovery documents Expert Witnesses Deposition Costs Court Fees Trial support, such as preparation of

exhibits

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What Does a Tort Claim Cost? Simple claims, such as auto accidents, that do

not go to trial Attorney time/Paralegal Time Limited office expenses Say, $1000, plus the value of the professional time and

overhead Med Mal

Experts - $5-$20,000 pretrial Discovery and deposition costs, $5-20,000 pretrial Total through trial - $20-100,000, plus time

Paying for Tort Law

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Pay as You Go Plaintiff pays hourly fees and expenses as

they are incurred If this is the only way that attorneys may

charge, what is the impact on claims that can be brought?

What does this do for plaintiff's attorney income?

What about defense attorney income?

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Contingent Fees 25-50% of the total award Expenses come from the plaintiff's share

If you are nice, you take them off the top, then figure your fee.

If not, you figure your fee, then subtract the expenses from the client's remainder

Attorney loans expense money until the claim is paid What if there is no recovery?

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Limits on Contingent Fees Until recently, only the US allowed contingent

fees What would this tell you about the prevalence of tort

litigation in other countries?

Some states cap fees on big cases Limits on loaning clients money and expenses

Used historically in the US to limit claims Still some limits I do not know if LA has limits

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Referral Fees Paying for cases

Do you think they just walk in the door? Try to get a hotel room near a plane crash.

Cannot pay non-lawyers Source of endless conflicts between plaintiff's lawyers and

disciplinary committees In most states, can only pay lawyers for work

done Incentive for endless subterfuge Why might lawyer referral fees be a good thing?

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Defense Lawyers - The Other Half of the Tort Dance Hourly

Plus expenses, lots of expenses Trend toward fixed fee - bad for associates

Very expensive Usually paid by insurance in negligence

cases You can go broke winning cases

What is the incentive for a defense lawyer?

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Transaction Costs in Tort Cases Plaintiff's side

Simple cases, 1/3 Complex cases with expenses and experts, 50+%

Defense Insurance adjustor time on small cases Lawyer fees on complex cases - probably at least 30% of

the average payout Also costs of running the insurance company

The injured person probably gets no more than 1/3 of the money paid on a claim.

The Consequences of Contingent Fees

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The Most Dreaded Words in Tort Practice

Judgment proof

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The Saga of Little Timmy Little Timmy is flattened by a drunk driver running

over the sidewalk Defendant is wearing a Sears uniform and driving

a Sears truck Start looking at new boats

Defendant is wearing old jeans, does not have a green card, and stole the truck Refer client to social worker Say you support universal health insurance

Are You Hurt Bad Enough to Get a

Lawyer?

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What do you have to recover to justify taking a case?

What are your out of pocket expenses? What is the lost opportunity cost of the

time? What is the probability of recovery? What is the timeframe for getting the

recovery, i.e., the net present day discounted value of the return?

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Simple Auto Case Assume the there are some medical costs and

property damage Assume the defendant is insured Assume there is a colorable claim for liability The odds are you will resolve without a lawsuit,

and you might take a case only worth a few thousand dollars

Even less if you do not any other work

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Medical Malpractice Case Discovery costs/Expert witness costs Higher probability it will go to trial Long period / Lower probability of return Capped damages 150k if you are hungry - leads to poor case

management 400K if you are serious

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Financial Culling Clients with real claims and substantial injuries,

but not enough provable damages get no representation

Judgment proof defendants - no representation One of the invisible costs of the torts business A prime reason why arbitration is not used to

eliminate medical malpractice tort litigation Paying all just claims would cost a lot more than the

current system

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Consequences of Judgment Proof Defendants If the defendant is judgment proof, then you

need one that is solvent This has fueled the breakdown of causation

of analysis and traditional notions of responsibly

The courts want to provide for the injured and their lawyers, to do so they must expand liability

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Making the Client Whole A goal of tort law is making the injured

person whole, i.e,. paying them the money measure of their damages if liability is proven

This is a theoretical impossibility Whatever are the probable damages, the plaintiff

can only get 50-60% of them But without contingent fees, there is no recovery

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The Damages Game The only solution is to expand the measure

of damages to allow the recovery of enough money to pay the attorney and to give the client enough money to solve his problems.

In the 1950s, Melvin Belli called this the adequate award problem

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The Transformation of Tort Law The expansion of recoverable damages to all the

plaintiff to recover enough money to pay the lawyer and have enough left to be close to whole

The recognition of tort cases as an asset that could justify financing

The development of information exchanges that allow tort lawyers to coordinate cases and share information.

Damages Worksheet